BOJ Will Consider Policy Change If Weak Yen Causes Inflation Overshoot
The central bank decided at its March meeting to end easing policies, including negative interest rates
TOKYO—The Bank of Japan would consider a policy response if the yen’s weakness causes inflation to rise sharply higher, Gov. Kazuo Ueda said Wednesday.
“If there is a risk that a virtuous cycle of wages and prices strengthens more than expected and underlying inflation rises above 2%, we need to consider changing monetary policy,” Ueda said in a parliamentary committee meeting, when asked by an opposition lawmaker whether the bank would act against the yen’s fall.
The yen is trading around 151.75 to the dollar on Wednesday, staying near its 34-year low.
Ueda also reiterated the bank would maintain accommodative monetary conditions for the time being because underlying inflation is still below the bank’s 2% target.
The central bank decided at its March meeting to end easing policies, including negative interest rates, as the bank has become confident about achieving the inflation target.
Ueda said the bank made the decision to move in March because waiting longer could have caused inflation to overshoot, forcing the BOJ 8301 -6.03%decrease; red down pointing triangle to raise interest rates more aggressively.